Jiang Yong Lu

Co-evolution Strategy Canvas

Co-evolution Strategy Canvas

“Co-evolution Strategy Canvas is inclusive and dynamic, profound and focused. It provides a verypractical methodology for entrepreneurs and managers to build end-game thinking.”

—Ming-Jer Chen, a world-famous expert in Strategy

“Co-evolution Strategy Canvas provides a great strategic thinking framework for entrepreneurs, aswell as a channel for enterprises to operate amidst the fog of uncertainties.”

—Chunhua Chen, Chair Professor, National School of Developmentof Peking University

“In such an amorphous mashup, if managers can rethink their own firms’ strategy based onCo-evolution Strategy Canvas, they may take a tumble and get relieved from anxiety of strategicdecision-making.”

—Shanyou Li, Founder of Hundun University

“The dynamic and systematic strategic thinking framework of Co-evolution Strategy Canvasprovides a set of framework and guidance of action for managers who are in urgent need ofimproving their strategic critical thinking capability.”

—Jianwen Liao, Senior Vice President and Chief Strategy Officer of Jing Dong

“Co-evolution Strategy Canvas introduces the logic of evolution from start-ups to excellencethrough picture telling. Picture tells the truth. Congratulations! You find one greater book.”

—Zhenyu Luo, Producer of Luogic Talkshow

“The most attractive thing of Co-evolution Strategy Canvas is that the framework of this book isbuilt on the theory of complexity. Nowadays, a deep understanding of complexity and chaos is anecessity of an effective corporate strategy.”

—Deng Fan, Founder of Spiritual Wealth Club

“Co-evolution Strategy Canvas is an operating system for Chinese firms, of which the theoreticalthinking is palpable and the collective wisdom is interactive. It is a valuable book for firms to makestrategic plans.”

—Shi Xu, Chairman of Beijing Seeyon Software

“Co-evolution Strategy Canvas presents a framework for corporate strategy systematically anddynamically. it provides a set of practical tools for the implementation of co-evolution strategy.”

—De Liu, Co-Founder and Senior Vice President of Xiaomi

“Co-evolution Strategy Canvas not only provides an example for scholars to develop originalthoughts of management, but also offers a set of navigation charts for firm innovation topractitioners.”

—Weiru Chen, Chief Strategy Officer of Alibaba Group, Cainiao Network

“Co-evolution Strategy Canvas is one of the best books on start-up’ strategy I’ve read in recentyears. It clearly explains how start-ups should develop their strategies.”

—Lixin Nan, Producer of Cyzone

“Co-evolution Strategy Canvas offers a systematic and dynamic strategic framework, which allowsyou to keep the whole picture in mind but start with the daily route.”

—Zhaofeng Xue, Keynote Speaker for Xue Zhaofeng’s Economics Class

“Co-evolution Strategy Canvas is a ‘unified theory’ of firms’ evolution from start-ups toexcellence. It suggests that the most brilliant management happens to coincide with how speciesevolve.”

—Weigang Wan, Author of Elite Daily Class in Iget

Jiang Yong Lu

Co-evolution StrategyCanvas

123

Jiang Yong LuDepartment of Organizationand Strategic ManagementPeking UniversityBeijing, China

ISBN 978-981-15-5987-7 ISBN 978-981-15-5988-4 (eBook)https://doi.org/10.1007/978-981-15-5988-4

Jointly published with Beijing Huazhang Graphics & Information Co., Ltd, China Machine PressThe print edition is not for sale in China (Mainland). Customers from China (Mainland) please order theprint book from: Beijing Huazhang Graphics & Information Co., Ltd, China Machine Press.

© Beijing Huazhang Graphics & Information Co., Ltd, China Machine Press 2021This work is subject to copyright. All rights are reserved by the Publishers, whether the whole or partof the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmissionor information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilarmethodology now known or hereafter developed.The use of general descriptive names, registered names, trademarks, service marks, etc. in thispublication does not imply, even in the absence of a specific statement, that such names are exempt fromthe relevant protective laws and regulations and therefore free for general use.The publishers, the authors, and the editors are safe to assume that the advice and information in thisbook are believed to be true and accurate at the date of publication. Neither the publishers nor theauthors or the editors give a warranty, express or implied, with respect to the material contained herein orfor any errors or omissions that may have been made. The publishers remain neutral with regard tojurisdictional claims in published maps and institutional affiliations.

This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd.The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721,Singapore

Preface

Since the reform and opening up, China’s economy has experienced remarkabledevelopment. Nevertheless, there still exists a big gap between Chinese companiesand their leading counterparts in the world regarding the R&D capability.

Take the mobile phone industry as an example. Chinese companies haveadvanced a lot in producing mobile terminals, but are still weak at producing chips.As for the software of mobile phones, while many app developers are Chinesecompanies, the global operating systems are still controlled by two US companies,Apple and Google.

Therefore, although the number of Chinese companies listed among the FortuneGlobal 500 may catch up with that of the USA within a few years, the fundamental“operating systems” of major industries are still in the hand of European and UScompanies, with Chinese companies focusing mostly on developing “apps.”

The situation is neither optimistic in the field of business management. Amongthe 2017 Global “Management Thinkers 50,” the top 25 are all Western. RuiminZhang, CEO of Haier, is the only one from China who is short-listed, ranked 26th.

If you take a look at books related to corporate management in China’s domesticmarket, you will find that most of the best-selling books are “imported goods.”A few books written by Chinese that enter the best-selling list are mostly cases orentrepreneurs’ personal biographies, whereas books introduced of Western coun-tries are associated with rules or principles of management.

If we regard companies as “apps” developed based on entrepreneurs’ manage-ment insights, the “operating systems” of Chinese companies are almost allimported. Despite the fact that “knowledge has no borders,” it is hard to imaginethat Chinese companies developed based on the “management operating systems”of Europe and USA can outperform European and US companies.

To this end, it is a need of developing Chinese companies’ own “managementoperating system,” based on their external environment, values, and managementexperiences.

v

A complete “management operating system” should cover four levels of phi-losophy, theory, tools, and experience. Philosophy is the value of management,theory is the mind-set of management, tools are the methodology of management,and experience is the accumulation of management practices.

Co-evolution Strategy Canvas is a “management operating system.”

Philosophy: Understanding the “people,” “issue,” and “time” of companies fromthe perspective of “human, earth, sky”; understanding the “thesis–antithesis–syn-thesis” of decision-making from the perspective of systematicness and dynamics.

Theory: Developing a theoretical framework that addresses 5W1H, that is Why,Who, What, Where, When, and How, fundamental strategic issues of companiesfrom the perspective of the four elements, four stages, and four paths of strategy.

Tools: Providing more than 50 practical tools that help to analyze the elements ofpeople and issues, internal and external aspects of business strategy, and tounderstand the strategic points of different stages in firms’ life cycle.

Experience: Summarizing a set of strategic mind-sets from more than 200 com-panies’ cases, which has been verified by many outstanding entrepreneurs andmanagers.

No matter you are an entrepreneur, a manager, or a talent in companies,Co-evolution Strategy Canvas can help you to understand the current position,undertake the whole picture, predict the ending, and cope with changes.

At last, I appreciate the financial support provided by National ScienceFoundation of China (# 71525004, # 72072003).

Beijing, China Jiang Yong Lu

vi Preface

Contents

1 Co-evolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 The Meaning of “Co-evolution” (共演) . . . . . . . . . . . . . . . . . . . . 1

1.1.1 Formula: Co-evolution = Systematicness �Dynamism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1.2 The Definition of “Strategy” (战略) . . . . . . . . . . . . . . . . . . . . . . . 61.2.1 Formula: Strategy = Insight � Vision . . . . . . . . . . . . . . . . 7

1.3 The World of “Complexity”(复杂) . . . . . . . . . . . . . . . . . . . . . . . 121.3.1 Complexity = Uncertainty � Discontinuity . . . . . . . . . . . . 131.3.2 Complexity and Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201.3.3 Tools for Four Life Stage Analysis . . . . . . . . . . . . . . . . . . 211.3.4 Types of Corporate Strategy . . . . . . . . . . . . . . . . . . . . . . . 221.3.5 Tools for Four Basis Strategy Analysis . . . . . . . . . . . . . . . 24

1.4 Knowledge System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261.4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261.4.2 Two Examples of Knowledge System . . . . . . . . . . . . . . . . 281.4.3 Tools for Knowledge System Analysis . . . . . . . . . . . . . . . 31

2 Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352.1 The First Principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

2.1.1 The First Principle of Firms . . . . . . . . . . . . . . . . . . . . . . . 352.2 Six Key Strategic Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

2.2.1 Tools for Six Key Strategic Questions . . . . . . . . . . . . . . . 402.2.2 Golden Circle Principles . . . . . . . . . . . . . . . . . . . . . . . . . 42

2.3 Users: Reason for Being . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432.3.1 Case Analysis: The Application of AARRR . . . . . . . . . . . 45

2.4 Organization: Source of Capability . . . . . . . . . . . . . . . . . . . . . . . 472.4.1 Case Analysis: The Organization of Alibaba . . . . . . . . . . . 48

2.5 Product: Basis of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502.5.1 Case Analysis: Product Development . . . . . . . . . . . . . . . . 51

vii

2.6 Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532.6.1 Case Analysis: Value Network in the Market . . . . . . . . . . 55

2.7 Co-Evolution Strategy Canvas . . . . . . . . . . . . . . . . . . . . . . . . . . . 562.7.1 Co-Evolution Strategy Canvas (12 Strategic Points) . . . . . . 582.7.2 Co-Evolution Strategy Canvas (36 Strategic Items) . . . . . . 59

3 Phases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613.1 Lifecycle of User Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

3.1.1 Lifecycle for User Elements . . . . . . . . . . . . . . . . . . . . . . . 613.1.2 Lifecycle of Organization Elements . . . . . . . . . . . . . . . . . 653.1.3 Double-S Curves of Organization Value . . . . . . . . . . . . . . 673.1.4 Lifecycle of Product Elements . . . . . . . . . . . . . . . . . . . . . 703.1.5 Double-S Curves of Product Value . . . . . . . . . . . . . . . . . . 723.1.6 Lifecycle of Market Elements . . . . . . . . . . . . . . . . . . . . . . 743.1.7 Double-S Curves of Market Value . . . . . . . . . . . . . . . . . . 76

3.2 Double-S Curves of Market Value . . . . . . . . . . . . . . . . . . . . . . . . 793.2.1 From Start-up to Excellence . . . . . . . . . . . . . . . . . . . . . . . 803.2.2 Start-up from Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

3.3 Core Algorithm of Life Code . . . . . . . . . . . . . . . . . . . . . . . . . . . 833.3.1 4 Phases and 4 Arithmetic Operations . . . . . . . . . . . . . . . . 84

3.4 4 Elements and 4 Criteria of Benefits . . . . . . . . . . . . . . . . . . . . . 853.4.1 Start-up Stage: User-Centric Capability . . . . . . . . . . . . . . . 863.4.2 Growing-up Stage: Product-Iteration Capability . . . . . . . . . 883.4.3 Expansion Stage: Market- Entry Capability . . . . . . . . . . . . 913.4.4 Transformation Stage: Organization-Upgrading

Capability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 943.5 4 Dimensions of Space and 4 Patterns . . . . . . . . . . . . . . . . . . . . . 98

3.5.1 4 Dimensions of Space + 4 Patterns . . . . . . . . . . . . . . . . . 983.5.2 Enterprise Value Model Tool . . . . . . . . . . . . . . . . . . . . . . 993.5.3 Championship in the 4 Strategic Phases and 4 Major

Martial Arts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

4 Start-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1034.1 4 Questions for Start-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

4.1.1 4 Questions for Start-Up Tools . . . . . . . . . . . . . . . . . . . . . 1054.2 12 Key Points for Start-Up Stage . . . . . . . . . . . . . . . . . . . . . . . . 113

4.2.1 Co-evolution Strategy Canvas for Start-Up Stage . . . . . . . . 1144.2.2 Case Analysis: Alibaba . . . . . . . . . . . . . . . . . . . . . . . . . . 115

5 Growing-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1175.1 4 Questions for Growing-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

5.1.1 4 Questions for Growing-Up Tools . . . . . . . . . . . . . . . . . . 119

viii Contents

5.2 12 Key Points of the Focused Growing-Up Stage . . . . . . . . . . . . . 1255.2.1 Co-evolution Strategy Canvas for the Focused

Growing-Up Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1265.2.2 Case Analysis: Alibaba . . . . . . . . . . . . . . . . . . . . . . . . . . 127

6 Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1296.1 4 Questions for Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

6.1.1 4 Questions for Expansion Tools . . . . . . . . . . . . . . . . . . . 1316.2 12 Key Points of the Amplifying Expansion Stage . . . . . . . . . . . . 138

6.2.1 Co-evolution Strategy Canvas for the AmplifyingExpansion Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138

6.2.2 Case Analysis: Alibaba . . . . . . . . . . . . . . . . . . . . . . . . . . 139

7 Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1417.1 4 Questions for Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . 142

7.1.1 4 Questions for Transformation Tools . . . . . . . . . . . . . . . . 1437.2 12 Key Points of the Upgrading Transformation Stage . . . . . . . . . 150

7.2.1 Co-evolution Strategy Canvas for the UpgradingTransformation Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

7.2.2 Case Analysis: Alibaba . . . . . . . . . . . . . . . . . . . . . . . . . . 152

8 Systematicness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1538.1 Systematicness of Co-evolution Strategy . . . . . . . . . . . . . . . . . . . 153

8.1.1 Feedback: The Operating Mechanism of the System . . . . . 1558.1.2 Enhanced Loop and Regulative Loops . . . . . . . . . . . . . . . 1568.1.3 Synergies Among Four Elements . . . . . . . . . . . . . . . . . . . 1588.1.4 Basic Principles of Synergy Between Elements . . . . . . . . . 173

8.2 Equation of Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

9 Dynamics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1879.1 Dynamics of Co-evolution Strategy . . . . . . . . . . . . . . . . . . . . . . . 187

9.1.1 Enhanced Feedback Loop for Changes in StrategicElements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

9.1.2 Mechanisms of Enhanced Feedback Loop for Userand Organization Elements . . . . . . . . . . . . . . . . . . . . . . . . 192

9.1.3 Mechanisms of Enhanced Feedback Loop for Productand Market Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194

9.1.4 Feedback Loop System for User Elements in DifferentStages of Development . . . . . . . . . . . . . . . . . . . . . . . . . . 196

9.1.5 Feedback Loop System for Organization Elementsin Different Stages of Development . . . . . . . . . . . . . . . . . 197

9.1.6 Feedback Loop System for Product Elementsin Different Stages of Development . . . . . . . . . . . . . . . . . 198

Contents ix

9.1.7 Feedback Loop System for Market Elementsin Different Stages of Development . . . . . . . . . . . . . . . . . 199

9.1.8 Four Paths of Evolutions . . . . . . . . . . . . . . . . . . . . . . . . . 2009.2 16-Word Formula of Co-evolution Strategy . . . . . . . . . . . . . . . . . 2069.3 Canvas and Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207

9.3.1 Canvas for User Evolution Path . . . . . . . . . . . . . . . . . . . . 2079.3.2 Canvas for Organization Evolution Path . . . . . . . . . . . . . . 2099.3.3 Canvas for Product Evolution Path . . . . . . . . . . . . . . . . . . 2119.3.4 Canvas for Market Evolution Path . . . . . . . . . . . . . . . . . . 212

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

x Contents

Chapter 1Co-evolution

In an era of chaos, from start to great, a make-or-break factor forfirms is the systematic and dynamic co-evolution of strategicelements.

1.1 The Meaning of “Co-evolution” (共演)

Traditional Chinese

Simplified Chinese

“Co-evolution (共演)(gongyan)” is originated from ecology, which refers to themutual adaptation of two interactive species in the process of evolution.

Drawn from the study of species’ co-evolution in ecology and the law of firmdevelopment, “Co-evolution strategy” refines four elements of firm strategy (user,organization, product, market) and summarizes the pattern of co-evolution of thefour elements across the four stages (start-up, growing-up, expansion, transfor-mation), which provides a set of strategy analysis tools.

Cultural origin: “共(gong)” first appeared in inscriptions on oracle bones. Thecharacter looks like holding a urn in hands, and the urn in old Chinese evolves intoa “口(kou)” in simplified Chinese.

Managerial implication: 共(gong): 共同(gong tong). “共(gong)” means stayingtogether; “同(tong)” means synergy. “共同(gong tong)” indicates that elements areorganized in a systematic way to achieve synergies. Everything mutually reinforcesand counteracts each other, making the great world.

© Beijing Huazhang Graphics & Information Co., Ltd, China Machine Press 2021J. Y. Lu, Co-evolution Strategy Canvas,https://doi.org/10.1007/978-981-15-5988-4_1

1

Cultural origin: “演(yan)” first appeared in seal script. The character looks like「水(shui)」(water), indicating that it is related to water.

Managerial implication: 演(yan): 演化(yan hua). “演(yan)” means flowing likewater, “化(hua)” means keeping changing. “演化(yan hua)” reflects that elementsare dynamic and change over time. As a person can’ t step twice into the same river,everything is evolving over time.

Co-evolution = systematicness dynamism

Co-evolution is a mindset of evaluating the environment from the perspective ofsystematicness and dynamics.

Co-evolution strategy emphasizes “graphic thinking”, which demonstrates thesystematicness and dynamics of strategy with a 2 x 2 Matrix and Double S-Curve.A 2 x 2 Matrix represents a systematic mindset, whereas A Double S-Curve curvesrepresent a dynamic mindset.

1.1.1 Formula:Co-evolution = Systematicness � Dynamism

1.1.1.1 Tool: 2 X 2 Matrix

Systematicness

Clas

s 1

Dim

ensi

on A

Dimension B

Clas

s 2

Class 1 Class 2

2 1 Co-evolution

Features2 � 2 matrix is the simplest and the most practical tools for systematic thinking.

The key feature of 2 x 2 matrix is “Mutual Exclusive, Collective Exhaustive(MECE)”.

2 x 2 matrix classifies things without overlaps or missing items. It meanwhilecaptures the core of the problem and addresses it effectively.

New retailInternet of

Things

Consumption

upgrade

Traditional

retail

thin

gsPe

opleIniti

ativ

e

PassivethingsPeople

2 2 matrix

(application)

ExamplesThe three strategic directions of Xiaomi (the Internet of Things, new retail, andconsumption upgrade) can be analyzed following three steps.

Step 1: Find dimensions and classes for analysis. Xiaomi is doing business, whichis nothing but the business of people or the business of things. Xiaomi is makingtransactions, the two side of which can be either initiative or passive.Step 2: Analyze four quadrants. Traditional retail is “people searching for things”,new retail is “things searching for people”, the Internet of Things is “things ini-tiatively find things”, upgrade consumption is based on the “people-to-peopleinteraction”.Step 3: Conclusion: In the future business, things becomes intelligent and areconferred the initiative capability. At the same time, the interaction between peoplebecomes particularly important. Giants should make up the “people-to-peopleinteraction” quadrant.

1.1 The Meaning of “Co-evolution” (共演) 3

1.1.1.2 Tool: Double-S Curves

Dynamism

Dimension 1

Dim

ensio

n 2

Curve A

Curve B

Features:

Double S-Curves are the simplest and the most practical tools for dynamic thinking.The key feature of a Double S-Curve is “mutually related and intertwined”.The dynamic pattern of 2S curves is reflected in figure above. In practice, there

might be more than one A curves (A1, A2…) and B curves (B1, B2…), the patternof which can be either steeper or flatter. The main idea of the Double S-Curve isthat before reaching the peak of curve A (A1, A2…), another (set of) curve(s) Bappears.

Lear

ning

out

com

e

“Learning”curve

“Prac cing”curve

me

Kindergarten

Primary school

Juniorhighschool

Senior highschool

undergraduate

Master

Doctoral

Postdoctoral

Intern

Junior staff

Intermediate-

level staff

Senior staffM

anagerSenior m

anagerG

eneralmanager

Vice president

PresidentChairm

an

lifelong learning

ExamplesEveryone needs to learn. In a saying that “to learn something and put it into practiceat due time (学而时习之)(xue er shi xi zhi)”, “学(xue) “ means “consciousness (觉悟)(jue wu)” rather than “learning (学习)(xue xi)according to Shuowenjiezi《说文

解字》; “习 (xi) “means repeating practice. “学 (xue)” is about knowledge, “习

4 1 Co-evolution

(xi)” is about action, “学习(xue xi)” is “the unity of knowledge and action (知行合

一)(zhi xing he yi)”.

1. Under the current education system, “learning and practicing”, “knowledge andaction” are largely separated from each other. The whole process fromkindergarten to senior high school and from undergraduate to doctoral study isabout “learning”, which relies largely on memorizing, but not consciousness.

2. After graduating from the high school or the undergraduate school, many peopleenter “practicing curve. Some of them start from working as an intern and finallyclimb up to the position of chairman, while some of them go back to schools tolearn or learn by themselves.

3. Ideally, learning curve and practicing curve should have a greater degree ofcoincidence, which allows us to integrate learning and practice, knowledge andaction, to band them into a “lifelong learning” rope, and to draw new S curvesthat extend the depth, width, and dimension of “learning”.

1.1.1.3 Tool: 2 � 2 Matrix

Scenario A

Dimension B

Dim

ensi

on A

Structure of the tool

Usage of the tool

Scenario B

Situ

atio

n A

Situ

atio

n B

Write down the two dimensions for analysis on the left and the underneath of the2 � 2 matric, as well as the two basic scenarios for each dimension.

Write down detailed explanations for each quadrant.

1.1 The Meaning of “Co-evolution” (共演) 5

1.1.1.4 Tool: Double-S Curves

Structure of the tool

Dimension 1

Dim

ensio

n 2

Curve A

Curve B

Usage of the toolWrite down the two dimensions for analysis on the horizontal axis and vertical

axis.Write down the name of the two curves.Write down detailed explanations in the blank.

1.2 The Definition of “Strategy” (战略)

Traditional Chinese

Simplified Chinese

What is strategy (战略)(zhan lve)?Different people have different views.The common view recognizes strategy as a comprehensive consideration of the

overall objective, whereas tactics is the means to realize certain strategy.

6 1 Co-evolution

Getting back to the origin of the culture, we can find that“战 (zhan)focuses onthe outside,略(lue) focuses on the inside”. Strategy is an integration of both internaland external aspects, and an art of both insights and visions.

Cultural origin: “战(zhan)” first appeared in Chinese bronze inscriptions, whichlooks like “戈(ge)、单(dan) “. Originally, 「单(dan)」denoted an armament;「戈

(ge)」 is typical arm.Managerial implications: 战(zhan): 征战(zheng zhan). The original meaning

of“战(zhan)”is a military occupation, suggesting looking outside. Going on anexpedition outward needs insights, and great insights lead to good strategy.

Cultural origin: “略(lve)” is originated from seal script. The character in seal scriptlooks like「田(tian)」and「各(ge). “田(tian) “ means it is related to the land.

Managerial implication: 略(lue); 谋略(mou lue). The original meaning of “略(lue)” is planning, suggesting looking inside. Planning inward needs visions – notonly seeing far ahead, but also thinking in depth.

Managerial implication: Therefore, strategy can be understood as

Strategy = Expedition � PlanningOr,

Strategy = Insight � Vision

1.2.1 Formula: Strategy = Insight � Vision

“Insight” reflects systematicness,“Vision” reflects dynamism.Having great insights means taking a bird’s-eye view of the systematicness of

the whole.Having long-term visions means recognizing the dynamism between the present

and the future.Therefore, developing the mindset of co-evolution strategy requires insights and

visions with systematicness and dynamism.

Two dimensions:

Insights represent the spatial dimension of strategy, while visions represent the timedimension of strategy.

1.2 The Definition of “Strategy” (战略) 7

Four types:In terms of the space, there are the part and the whole.In terms of the time, there are the present and the future.

Four quadrants:

“Understand the current position”: focus on the present and the part.“Undertake the whole picture”: look at the earth from the moon.“Foresee the ending”: look at the present from the future.“Cope with changes “: grasp the situation and adjust to it.

1.2.1.1 4 Chinese Characters Explanation

Traditional Chinese

Simplified Chinese

“格(ge)” first appeared in Chinese bronze inscriptions. The left part of it is “木(mu) ”, which represents appliances. The right part of it is “各(ge) ”, extended asthe land acquired by the attack.

“局(ju)” first appeared in the Qin slips of the Period of Warring States. Theupper part “尺(chi)” and the lower part “口(kou)” indicate the area under control.“格局(ge ju)”, in together, indicate the size of the space.

“视(shi)” first appeared in the Oracle. The upper part “礻” means sacrifice andthe lower part “目(mu)” means catching sights of something. Put together, “视(shi)” indicates that when offering sacrifices, we should look carefully for the signs.

“野(ye)” first appeared in seal script. The left and the right parts of it are two “木(mu)”, which together become “林(lin)” of the forest (山林shan lin). Between thetwo “木(mu)” is “土(tu)”, indicating the countryside. The left, middle and rightparts together represent the transition between pastoral land and untamed forests.

8 1 Co-evolution

1.2.1.2 2 � 2 Matrix Explanation

Undertake the whole picture

look at the earth from the moon

Predict the endinglook at the present from

the future

Who

le

Vision

Insi

ght

Understand the current position

focus on the present and the part

Cope with changesgrasp the situation and

adjust to itPart

Present Future

present future

For example, the four steps of strategic planning in Alibaba is “ending,arrangement, positioning, and tactics”:

Predicting the ending to have the direction;Undertake the whole picture to make better arrangement;Understand the current position to position accurately;Cope with changes to realize the value of tactics.

1.2 The Definition of “Strategy” (战略) 9

1.2.1.3 SWOT Analysis and 2 � 2 Matrixw

hole

part

Insi

ght

futurepresentVision

strength

weakness

opportunity

threat

strength

weakness

opportunity

threat

strength

weakness

opportunity

threat

strength

weakness

opportunity

threat

Tool instruction

1. Traditional SWOT analysis focuses on the present to analyze the strengths andweaknesses, opportunities and threats one possesses.

2. SWOT analysis for co-evolution extends the insight to “the part and the whole”,and extends the vision to “the present and the future”.

Usage of the tool

1. Write down the strengths and weaknesses, opportunities and threats a firm facesor possesses in the part and the whole, in the present and the future.

2. Analyze how the strengths and weaknesses, opportunities and threats transformacross four quadrants.

For example, whether the strength of the present and the part becomes theweakness of the present and the whole; or, whether the threat of the present and thepart becomes the opportunity of the future and the whole.

10 1 Co-evolution

1.2.1.4 SWOT Analysis an Example: Iget App

Whole

(Education)

Part

Paying for

the

knowledge

Insi

ght

FuturePresentVision

strength

weakness

opportunity

threat

A leading brand of paying

for the knowledge, of

which users have high

willingness to pay.

Quality control leads

to long product

development cycle

The window for

knowledge payment has

opened, with increasing

number of users

Competitive products are

emerging, which leads to

lower customer renewing

rate

The leading position in

the first stage leads to

more available resources

for the second stage

Relatively fixed

business form is

difficult to meet

customized needs

Open internal

communities enhance the

interaction between

authors and users

Competitive products from

specialized knowledge

community are focusing on

the customized needs

Audio based on

books and classes is

convenient for

distribution.

Audio and phones

may restrict deep

thinking.

General education,

interdisciplinary

knowledge, career

learning.

Lifelong learning

platforms for

specialized careers

Building a systematic

knowledge system

with fragmented time.

Becoming an important

supplement of national

education.

Founders do not have

enough experience in

education industry

Direct competition from

stronger education

product of communities.

strength

weakness

opportunity

threat

strength

weakness

opportunity

threat

strength

weakness

opportunity

threat

ExampleTake Iget App as an example. For Iget, paying for the knowledge is a “part” whilethe education industry is the “whole”.

Take the beginning of 2018 as the “present” to predict the strength, weakness,opportunity and threat of the “future”.

Note: The example doesn’t represent the author’s assessment of the firm. It onlyserves as an example for analysis.

1.2 The Definition of “Strategy” (战略) 11

1.3 The World of “Complexity”(复杂)

Archaic Charaters

Simplified Chinese

“复(fu)” is first seen in inscriptions on oracle bones, which is a pictographiccharacter. In Oracle, it looks like a city with exits at both ends, plus a character “止(zhi)” that represents a stop during walk. In together it means going back and forthafter leaving the city.

“杂(za)” is first seen in Warring States characters, which is an associativecompound. The simplified character “杂(za)” is composed of “九(jiu)” and “木(mu)”. “九(jiu)” indicates the number is large,together with “木(mi)” it means manykinds of trees are mixed together.

“复(fu)” and “杂(za)” both represent a large number or types of things.According to the Modern Chinese Dictionary, “复杂 (fu za)(complexity)” meansthat the variety of things is numerous and miscellaneous.

“复杂 (fu za) (complexity)” has actually become a scientific system namedcomplex systems. Based on the definition from the book Complexity, “a complexsystem is a network composed of a large number of components that operatewithout central control. It generates complex collective behavior and processescomplex information following simple operation rules, and generates adaptabilityvia learning and evolution.”

Complexity is often used to describe the real world. Things are complex; peopleare more complex. However, what exactly is complexity supposed to mean? In fact,complexity can be understood with a very simple formula:

12 1 Co-evolution

1.3.1 Complexity = Uncertainty � Discontinuity

Simplified

characters

Archaic

characters

1.3.1.1 Uncertainty

Since ancient times, the evolution of human society and the development of sci-ence, to a large extent, are to reduce uncertainty. For example, the transition fromthe hunter-gatherer age to the slash-and-burn farming age was not due to the factthat farming was more efficient than hunting for energy, but rather to the certaintythat it would be. For example, the purpose of human development science is tograsp certain laws of the world, and then use these laws to help human obtaincertain results.

In Aristotle’s day, people believed that the motion of objects on the ground wasdifferent from that of objects in the sky, and that objects made up of differentmaterials on the ground moved in different ways.

1.3 The World of “Complexity”(复杂) 13